Select Committee on Trade and Industry Minutes of Evidence

Examination of Witnesses (Questions 220 - 239)




  220. Would I be pessimistic in anticipating a Mexican stand-off between three different Departments with responsibility for your own activities, the DVLA and the Environment Agency, even allowing for the fact that you do have the green bits of the DTI; would I be pessimistic?
  (Dr Keddie) On the basis of the discussions we have had with these organisations and devolved administrations up to now, yes, you would be being pessimistic.

  221. So this is an historic first?
  (Dr Keddie) There are always firsts, and part of my job is to break new ground as well.

  222. I will not say we live in hope then?
  (Dr Keddie) You can judge us later on.

Richard Burden

  223. Can I just take you back to something which I think I got right before. You said that the issue of take-back and treatment costs should be finances, with Ministers?
  (Dr Keddie) That is something that is being discussed with Ministers, yes.

  224. If that is the case, how can the consultation really mean very much? I guess, you could say any of the players in this will want to minimise their costs and pass them on somewhere else, whether it be manufacturers, shredders, dismantlers, whatever, but given the kind of potentially—what we are hearing from everybody, from their own perspective—huge sums involved here, issues of accrual, issues of historic car parcs versus current car parcs, if there is no guidance as to what people are being consulted on, on costs, how can they respond to the consultation?
  (Dr Keddie) The purpose of the consultation document, as it expressly says, is not to deal with finance; you are saying, how can we consult without doing that.

  225. What we have been hearing is, it is pretty important to everybody's perspective.
  (Dr Keddie) Yes, but I think you have also been hearing, and certainly reading the memoranda you have got and our own consultation document, that there is actually a lot of substance and technical issues that also need to be discussed, collectively understood, as to how various options might work, and so on. There are ways then, however the financing is done, to match the financing to what we think is likely to be the most effective way in terms of implementing the Directive. So it is not just purely finance, important as finance is.


  226. But we are dealing with commercial enterprises, who at the end of the day live or die by the bottom line or their ability to convince their bank managers that they are worthwhile investing in for their acquisition of equipment that the new tasks will require; and it is all to be sorted out by April?
  (Dr Keddie) That is the intention, yes.

Mr Djanogly

  227. One of the concerns that I saw was in relation to the consultation document not indicating the number of existing dismantlers, scrap-yards and shredders. I think one of the concerns here is in relation to having a level regulatory playing field; if we do not know how many there are, perhaps the Department now has this information but it did not seem to have done so at the time when the consultation went out, concern could be had that there would be a blanket authorisation for most of the existing sites, given the tight timetable, and that, therefore, there will not be an even playing field?
  (Dr Keddie) I am not sure I understand the question, and I am going to ask Sheila McKinley, in a minute, to come back to you. But, in fact, in terms of knowing the numbers, and so on, yes, we did; if they are not in the consultation document—

  228. No, they are very vaguely stated in the consultation document?
  (Dr Keddie) Yes, but, I mean, the basic scale of the facilities out there, the numbers of them, the types of facilities, yes, we were aware of; but I am not sure I quite understand your point about blanket authorisation.
  (Mrs McKinley) Neither am I, but I think, certainly, yes, we do have an idea about how many of these facilities there are, and I can tell you roughly what that is. We have got about 1,500 businesses currently operating under a Registered Exemption; so these are generally the smaller businesses who would handle, say, 40 or fewer vehicles in every seven days, or so. You then have larger businesses who are handling salvage vehicles or dismantling them, and these would be doing so under the terms of a Waste Management Licence, which is slightly different, and there are about 750 of those. And those would include people like, for example, the large shredders, who would be dealing not just with end of life vehicles materials but also with other, for example, waste electronic and electrical equipment, or even packaging. So, on top of that, you would have, of course, the little grey area of dismantlers who perhaps are operating without any authorisation at all, and naturally we do not know exactly how many there are. But that gives you a total of between 2,000 and 3,000.

  229. And they will have to apply for the Licence before ...
  (Mrs McKinley) If they want to go on handling end of life vehicles, they will have to apply for a permit, yes.

  230. And you feel confident, as a Department, that that process will happen smoothly within the time-frame?
  (Mrs McKinley) Yes, I think I do. We have got two strands of activity going on at the moment. There are discussions that the Department is holding with dismantlers, shredders, salvage operators, the vehicle manufacturing industry and the Environment Agency, and they are talking about what sort of permanent system should be developed. I think that is going relatively well. Separately, but linked to that, there is, if you like, a more technical discussion being handled by the Environment Agency together with the industry, and they are looking at the terms of how to implement, and indeed interpret, Annex I, which the dismantling industry referred to earlier on.

  231. The fear being that, because most dismantlers are not up to scratch to make the Directive actually work, the Government will just have to turn a blind eye to what could be sub-standard operations?
  (Mrs McKinley) I do not think that is really what the Environment Agency would be intending to do at all. There will be a new permit, people will have to apply for it and comply with the standards required in Annex I, if they want to go on handling end of life vehicles material. Clearly, we know that there are some operators at the moment who are not licensed at all, but I think you will find that the Environment Agency already has in train, whether or not we have an End of Life Vehicles Directive, an exercise to try to find these unlicensed operators and bring them either within the system or out of it.

  232. Is it true that there are going to be about 1,500 dismantlers operating illegally?
  (Mrs McKinley) My own feeling is that that is a rather high figure, I would put that closer, I think, to about 700, perhaps 700 or 800, but, by definition, we do not have an exact number.

  233. Between the need for getting people to take licences and cracking down on illegal activity, in what is a rather tight time-frame, do you see a major shake-up of this market going to be going on over the next few months?
  (Mrs McKinley) I do not know that I would see a shake-up in the next few months. I think the shake-up will start and I think there will be a shake-up but possibly over the next couple of years, as things readjust and people get accustomed to the new system that gets implemented in due course.

  234. Have you given any assessment to possible job losses resulting from this?
  (Dr Keddie) You used the term "shake-up of the market". One of the things we are learning from Directives of this sort, because they do have considerable ramifications, very often beyond the businesses directly affected by them, is that, to some extent, you change the structure of business and the business relationships. In terms of impact on jobs, every assessment I have seen of environmental legislation or similar legislation on jobs is, in fact, you tend to change the structure of the businesses more than actually either having great pluses and minuses. All the economic assessments I have seen, any job changes are on the margins, they tend to be very small and undetectable when you actually look at the overall business that is affected.

  235. If I can now turn to the other side of the spectrum, the shredding industry, which seems to be dominated by two large players who have something like 80 per cent of the shredding capacity in the UK, surely in the context of the proposals any market that is dominated to such a great extent by two players raises competition issues; what was the Department's attitude towards this?
  (Dr Keddie) At the present time, we feel that the situation should be okay, but, in fact, we are taking advice from OFT on that and we have been consulting with OFT all along, so to get their view as well on the competition implications. I am not sure I can give you a more detailed answer at the present time, other than that we are very aware of the issue, but we do not think it is a major issue, at the present time, as we see it.

  236. You are not looking at ways of resolving it in the next few months?
  (Dr Keddie) Not within the next few months on that, no, we have got other things to do; but we are very alive to the issue. So, yes, it is an issue we need to keep an eye on.

  237. If one of them were to bid for the other one, for instance, what would the Department's view be?
  (Dr Keddie) That takes us into territory that is outside my sphere of responsibility, but, clearly, as a Department, and the OFT, we need to probably look at that; but I do not think I can say more just now.

  Mr Djanogly: It is clearly an area of concern, Chairman.


  238. It is certainly something that we will be watching.
  (Dr Keddie) Sorry, Chairman, to interrupt you. I think we need to bear in mind, however, that there is an infrastructure out there working at the present time and it is actually recycling 75 per cent by weight, at least of vehicles, at the present time. It may not be to all the standards in the Directive but there are not competition policy issues around there at the present time. So we just need to watch that we do not jump to conclusions, because we do have a reasonably well operating system at the present time.

Mr Djanogly

  239. I am sorry, you are talking about the non-shredding recycling?
  (Dr Keddie) Well the whole process; shredders are out there shredding vehicles today. There are no competition policy issues at the present time.

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